If you are reading this post, that probably means you are looking for much more in your suppliers than just mere products or services (you’re looking for “the right supplier,” not just “a supplier”). If that’s the case, you may want to rephrase the question itself. Rather than being concerned with selecting the right supplier, you’re really concerned with identifying a valuable business partner.

Supplier selection by itself is easy: find a commodity you need, find a few providers, identify a reasonable one to negotiate with, and start buying. But any procurement professional knows that won’t suffice these days, as today is not about the commodity itself anymore, it’s about strategy and risk mitigation to the supply chain. We should no longer see supplier selection as a mere quotation process, but as an encompassing engagement to gain a competitive advantage. While this will be especially true when dealing with companies associated to your direct spend categories, keep in mind that no business relationship should be taken for granted, if it affects your cash flow, it will likely affect your strategy, even if you are only buying paper and pens.

So, with that in mind, an RFx will only be a small part of your selection process, and much more effort will have to be placed during the early stages of a business partner selection process. To make sure that you are generating real value from the get-go, a scoping discussion needs to take place at a strategic level. This way, you will allow your new partner to be adequately absorbed into your organization’s (ambitious) overarching strategy; conversely, you’ll ensure that your organization also supports their strategy. With the strategic sourcing and procurement function becoming more critical to world class organizations, embracing such a strategic approach, as opposed to a purely operational one, will enable your company and your supplier base to achieve ongoing success.

The first step is to stop thinking of the companies with whom you do business simply as suppliers, and start thinking of them as opportunity enablers – or “partners” in short. While semantics may have little significance to you, fundamentally speaking, the message has great impact in the way your company approaches and eventually establishes synergies outside the organization; the result can be summed-up in two sweet words: “competitive advantage”.

To really achieve a paradigm shift, it is not the process per se that needs to be adjusted but the way we go about that process; it is not the process itself that drives results, but the degree of success in executing that process. In the next post of this short series, I touch on the actions and the meaning of the process – and the approach through which you ensure a well-engineered process is followed.
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Diego De la Garza

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